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Item 7. Management’s Discussion and Analysis

2024-03-26 compared with 2023-03-23 · 68 added, 73 removed, 208 unchanged (40% of the section changed)

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Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Item 1A, Risk factors, in this Annual Report on Form 10-K.

We are a clinical-stage biopharmaceutical company engaged in the discovery and development of innovative, small molecule therapeutics targeting age-related degenerative diseases and disorders of the central nervous system, or CNS, and retina.

Currently available therapies for these diseases are limited, with many diseases having no approved therapies or treatments.

Our goal is to develop disease modifying treatments for patients with these degenerative disorders by initially leveraging our expertise in the σ-2 (sigma-2) receptor, or S2R, which is expressed by multiple cell types, including neuronal synapses, and acts as a key regulator of cellular damage commonly associated with certain age-related degenerative diseases of the CNS and retina.

Currently available therapies for these diseases are limited, with few Alzheimer’s disease (“AD”) treatments, two approved treatments for geographic atrophy (GA) secondary to dry age-related macular degeneration (“dAMD”) and no approved treatments for dementia with Lewy bodies.

Our goal is to develop disease-modifying treatments for patients with these degenerative disorders by initially leveraging our expertise in the σ-2 (sigma-2) receptor (“S2R”), which is expressed by multiple cell types, including neuronal synapses, and acts as a key regulator of cellular damage commonly associated with certain age-related degenerative diseases of the CNS and retina.

We believe that targeting the S2R complex represents a mechanism that is functionally distinct from other current approaches in clinical development for the treatment of degenerative diseases.

Recent clinical results support this hypothesis.

In the SNAP study, results of which were published in May 2023 in the journal, Translational Neurodegeneration and showed that a single oral dose of CT1812 rapidly displaces Aβ oligomers from synapses of individuals with AD.

In the SEQUEL study, top-line results showed that four weeks of treatment with CT1812 improved synapse activity and connectivity of brain regions as measured via quantitative electroencephalogram (“qEEG”).

Together, these findings provide evidence that the displacement of oligomers from synapses via CT1812 engagement with the S2R results in improved synapse function.

In blinded and unblinded clinical trials, several patients experienced asymptomatic, reversible elevations in serum liver chemistries prompting harmonization of monitoring, increasing frequency where appropriate, across our clinical trials.

Since our inception in 2007, we have incurred significant operating losses and devoted substantially all of our time and resources to developing our lead product candidate, CT1812, building our intellectual property portfolio, raising capital and recruiting management and technical staff to support these operations.

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We incurred net losses of $25.8 million and $21.4 million for the years ended December 31, 2023 and 2022, respectively.

To date, we have funded our operations primarily with proceeds from grants awarded by the National Institute of Aging, or NIA, a division of the National Institutes of Health, or NIH, and proceeds from our initial public offering, or IPO, completed in October 2021, proceeds from our follow-on public offering in November 2022, and the sales of our convertible promissory notes, convertible preferred stock, simple agreements for future equity, or SAFE, and stock option exercises.

Since our inception, we have received approximately $171.0 million in cumulative grant awards to fund our clinical trials, primarily from the NIA, and we have raised approximately $108.8 million in net proceeds from sales of our equity securities, convertible notes, SAFE, stock option exercises, our IPO and follow-on public offering.

To date, we have funded our operations primarily with proceeds from grants awarded by the National Institute of Aging (the “NIA”), a division of the National Institutes of Health (the “NIH”), and proceeds from our initial public offering (the “IPO”), completed in October 2021, proceeds from our follow-on public offerings in November 2022 and March 2024, sales of our common stock through our ATM (as defined below), sales of our convertible promissory notes, convertible preferred stock, simple agreements for future equity (“SAFE”) and stock option exercises.

Since our inception, we have received approximately $171.0 million in cumulative grant awards to fund our clinical trials, primarily from the NIA, and we have raised approximately $124.5 million in net proceeds from sales of our equity securities, convertible notes, SAFE, stock option exercises, IPO, follow-on public offerings, ATM, and equity line financing with Lincoln Park.

As of December 31, 2023, we had cash and cash equivalents of $29.9 million.

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Riley Securities, Inc., or the Sales Agents, providing for the offering, issuance and sale by us of up to $40 million of our common stock from time to time in “at-the-market” offerings (the “ATM”).

For the year ended December 31, 2022, we have not sold any shares of common stock under the ATM.

For the period ended December 31, 2023, we sold 2,859,074 shares of its common stock pursuant to the ATM for gross proceeds of approximately $5.3 million.

On March 10, 2023, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) for an equity line financing (the “Lincoln Park Purchase Agreement”).

The Lincoln Park Purchase Agreement provides that, subject to the terms and conditions set forth therein, we have the right, but not the obligation, to direct Lincoln Park to purchase up to $35 million of shares of common stock at our sole discretion, over a 36-month period commencing on March 10, 2023.

We filed a prospectus supplement to our registration statement on Form S-3 (File No.

333-268992) covering the resale of shares of common stock that are issued under the Lincoln Park Purchase Agreement.

During the year end December 31, 2023, we sold 125,000 shares of common stock to Lincoln Park for proceeds of $0.2 million, as part of the equity line financing arrangement.

As of December 31, 2023, $34.8 million was available to draw pursuant to the Lincoln Park Purchase Agreement.

On March 14, 2024, we completed our follow-on public offering, pursuant to which we issued and sold 6,571,428 shares of our common stock at a public offering price of $1.75 per share.

In connection with the follow-on public offering, we received net proceeds of approximately $10.4 million, after deducting underwriting discounts and commissions and other offering related expenses.

We expect to continue to incur significant and increasing expenses and net losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel and operate as a public company.

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We do not own or operate manufacturing facilities.

We rely, and expect to continue to rely, on third parties for the manufacture of CT1812 for preclinical studies and clinical trials, as well as for commercial manufacture if CT1812 obtains marketing approval.

We rely, and expect to continue to rely, on third parties for the manufacture of CT1812 for preclinical studies and clinical trials, as well as for commercial manufacture if CT1812 obtains

marketing approval.

We also rely, and expect to continue to rely, on third parties to manufacture, package, label, store, and distribute CT1812, if marketing approval is obtained.

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Impact of COVID-19 on Our Business

Our business has been and could continue to be adversely affected by the effects of the ongoing COVID-19 pandemic, including, but not limited to, our clinical trials.

Our business has been and could be adversely affected by the effects of the COVID-19 pandemic or other national health issues.

For example, our ongoing and/or planned clinical trials may be impacted by interruptions or delays in the operations of the FDA and comparable foreign regulatory authorities.

Additionally, we have made certain adjustments to the operation of our trials in an effort to ensure the monitoring and safety of patients and minimize risks to trial integrity during the pandemic in accordance with the guidance issued by the FDA and may need to make further adjustments in the future.

We have also initiated our clinical trial protocols to enable remote visits to mitigate any potential impacts as a result of the COVID-19 pandemic.

Many of these adjustments are new and untested, may not be effective, may affect the integrity of data collected, and may have unforeseen effects on the progress and completion of our clinical trials and the findings from such clinical trials.

The spread of COVID-19, including the spread of new strains and variants of COVID-19, and actions taken to reduce such spread may also materially affect us economically.

While the potential further economic impact brought by, and the duration of, the COVID 19 pandemic may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position.

While the potential further economic impact brought by the COVID-19 pandemic may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position.

As a result, we may face difficulties raising capital through future sales of our common stock or such sales may be on unfavorable terms.

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We expect that our general and administrative expenses will increase for the foreseeable future as we increase our headcount to support our continued research activities and development of our programs.

Following the completion of our IPO on October 13, 2021, we have incurred, and will continue to incur, substantially increased expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, and those of any national securities exchange on which our securities are traded, legal, auditing, additional insurance expenses, investor relations activities, and other administrative and professional services.

Other Income (Expense)

Grant income relates to the grants awarded from governmental bodies that are conditional cost reimbursement grants and are recognized as grant income as allowable costs are incurred and the right to payment is realized.

The grants awarded relate to agreed upon direct and indirect costs for specific studies or clinical trials, which may include personnel

and consulting costs, costs paid to contract research organizations, research institutions and /or consortiums involved in the grant, as well as facilities and administrative costs.

The grants awarded relate to agreed upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and /or consortiums involved in the grant, as well as facilities and administrative costs.

These grants are cost plus fixed fee arrangements in which we are reimbursed for eligible direct and indirect costs over time, up to the maximum amount of each specific grant award.

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Our clinical trials have been funded by approximately $171.0 million in cumulative grants awarded primarily by the NIA, which includes an approximately $81.0 million grant from the NIA to fund our Phase 2 (COG0203) study of CT1812 in patients with early-stage AD, an approximately $30.5 million grant from the NIA to fund our Phase 2 (COG0201) study of CT1812 in patients with mild-to-moderate AD, and an approximately $29.5 million grant from the NIA to fund our Phase 2 (COG1201) study of CT1812 in patients with dementia with Lewy bodies.

Change in fair value of derivative liability

Change in fair value of our derivative liability consists of changes in the fair value of certain conversion and redemption features associated with our convertible notes that are required to be bifurcated and accounted for as free-standing derivative financial instruments.

The derivative liability expired unexercised upon the conversion of the convertible notes into Series B-1 convertible preferred stock in May 2021.

Change in fair value of SAFE

Change in fair value of our SAFE consists of fair value adjustments to these instruments based primarily on the changes in the probability of occurrence and estimated timing of future event inputs in the valuation model.

Upon the occurrence of our IPO on October 7, 2021, the SAFE was converted into 931,485 shares of our common stock.

Gain on Debt Extinguishment

Gain on debt extinguishment for the year ended December 31, 2021 was the result of the forgiveness of the Paycheck Protection Program loan on January 21, 2021.

There was no gain or loss on debt extinguishment for the year ended December 31, 2022.

Interest Expense

Interest expense for the year ended December 31, 2022 consisted of interest expense related to the insurance premium financing arrangement with a lender.

Interest expense for the year ended December 31, 2021 primarily consisted of interest expense from our convertible notes.

Interest expense for the years ended December 31, 2023 and 2022 consisted of interest expense related to the insurance premium financing arrangement with a lender.

Other Income (Expense), Net

Other income (expense), net consists primarily of research and development tax credits earned in the applicable period, as well as foreign currency transaction gains or losses, and interest income from interest-bearing cash equivalents.

Other income (expense), net consists primarily of interest income from money market funds, other fees such as offering costs incurred to establish our equity line financing, as well as foreign currency transaction gains or losses.

Results of Operations

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Other income (expense):

Change in the fair value of the derivative liability

Change in the fair value of SAFE

Other income (expense), net

Gain on debt extinguishment

Interest expense

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Clinical programs

Manufacturing

Preclinical programs

Facilities and other costs

Manufacturing

Other expense

Total research & development expenses

Research and development expenses were $37.2 million for the year ended December 31, 2023, compared to $30.3 million for the year ended December 31, 2022.

The increase of $6.9 million was primarily due to the following:

● an increase of $11.1 million in clinical programs related to increased Phase 2 trial activity primarily due to increased contract research organization spend;

● an increase of $2.6 million in personnel costs associated with expanded research and development activities;

● a decrease of $2.8 million in manufacturing expense related to costs incurred with contract manufacturing organizations for production of pre-clinical and future clinical trial materials associated with our most advanced product candidates due to the timing of the manufacturing of the pre-clinical and clinical trial materials;

● an increase of $0.9 million in preclinical programs, facilities and other costs primarily due to increased sponsored research spend under grants.

● an increase of $5.4 million in clinical programs primarily related to increased Phase 2 trial activities with contract research organizations;

● an increase of $1.7 million in personnel costs associated with expanded research and development activities, and equity-based compensation expense;

● an increase of $1.5 million in preclinical programs, and other expense primarily due to increased research spend;

● a decrease of $1.7 million in manufacturing related to lower costs with contract manufacturing organizations for the production of pre-clinical and future clinical trial supply.

General and Administrative Expenses

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The increase of $0.3 million was primarily due to:

● an increase of $1.1 million in Director & Officer liability insurance and other expenses;

● an increase of $0.6 million in equity-based compensation from stock option grants and restricted stock unit (“RSU”);

● an increase of $0.3 million in compensation and employee benefits driven by increased headcount;

● an increase of $2.6 million in professional fees driven by increased audit, tax, and legal services;

● a decrease of $1.3 million in equity-based compensation from stock option grants.

● a decrease of $0.2 million in professional fees driven by decreased audit, tax, and legal services;

● a decrease of $0.4 million in Director & Officer liability insurance and other expenses.

Other Income (Expense)

Grant income was $24.8 million for the year ended December 31, 2023, compared to $22.2 million for the year ended December 31, 2022.

The change in grant income is correlated with the increase in eligible reimbursable costs incurred during 2022 as compared to 2021.

Change in Fair Value of the Derivative Liability

Changes in the fair value derivative liability resulted in a gain of $2.2 million for the year ended December 31, 2021.

There was no gain or loss for the year ended December 31, 2022 as the derecognition of the derivative liability occurred in May 2021 upon the conversion of convertible notes into shares of Series B-1 convertible preferred stock.

Change in Fair Value of the SAFE

Changes in the fair value of the SAFE resulted in a loss of $2.2 million for the year ended December 31, 2021.

There was no gain or loss for the year ended December 31, 2022 as the derecognition of the SAFE liability occurred when the SAFE converted into shares of our common stock upon the closing of our IPO.

The change in grant income is correlated with the increase in eligible reimbursable costs related to clinical trials incurred during 2023 as compared to 2022.

Other Income (Expense), Net

Other income, net was less than $0.1 million for the year ended December 31, 2022, compared to other expense, net of less than $0.1 million for the year ended December 31, 2021.

Overall, management believes that the change in other expense was not significant in either period.

Gain on Debt Extinguishment

Gain on debt extinguishment was $0.4 million for the year ended December 31, 2021 as a result of the forgiveness of the Paycheck Protection Program loan on January 21, 2021.

There was no gain or loss on debt extinguishment for the year ended December 31, 2022.

Other income, net was $0.2 million for the year ended December 31, 2023, compared to other expense, net of less than $0.1 million for the year ended December 31, 2022.

The change in other income (expense), net was driven primarily by interest earned on money market funds.

Interest Expense

Interest expense was less than $0.1 million for the year ended December 31, 2022, compared to interest expense of $0.9 million for the year ended December 31, 2021.

The change of $0.9 million in interest expense was the result of the convertible notes outstanding balance during the year ended December 31, 2021, which were subsequently converted into shares of our Series B-1 convertible preferred stock in May 2021.

Interest expense was less than $0.1 million for the year ended December 31, 2023, compared to interest expense of less than $0.1 million for the year ended December 31, 2022.

Interest expense was not significant in either period.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have funded our operations primarily with proceeds from grants awarded by the NIA, and proceeds from the sales of our convertible promissory notes, convertible preferred stock, SAFE, stock option exercises, our IPO and our follow-on public offering.

Since our inception, we have received grant awards primarily from the NIA in the aggregate amount of approximately $171.0 million and have raised approximately $108.8 million in net proceeds from sales of our equity securities, convertible notes and SAFE, stock option exercises, our IPO and our follow-on public offering.

On March 25, 2021, we completed a SAFE offering with various investors, pursuant to which we received gross proceeds in an aggregate amount equal to $8.9 million.

On October 13, 2021, we closed our IPO, selling 3,768,116 shares of our common stock at a public offering price of $12.00 per share.

Additionally, on November 12, 2021, the underwriters exercise of their over-allotment option to purchase 565,217 shares of our common stock closed.

The net proceeds were approximately $44.2 million, after deducting underwriting discounts and commissions and other offering related expenses payable by us, which includes net proceeds of approximately $6.3 million from the exercise of the over-allotment option.

Since our inception, we have received grant awards primarily from the NIA in the aggregate amount of approximately $171.0 million and have raised approximately $124.5 million in net proceeds from sales of our equity securities, convertible notes and SAFE, stock option exercises, our ATM, our equity line financing with Lincoln Park, our IPO and our follow-on public offerings.

The net proceeds from our IPO, which closed on October 13, 2021, were approximately $44.2 million, after deducting underwriting discounts and commissions and other offering related expenses payable by us.

On November 15, 2022, we closed our follow-on public offering, selling 5,000,000 shares of our common stock at a public offering price of $1.20 per share.

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On December 23, 2022, we entered into a sales agreement with the Sales Agents, providing for the offering, issuance and sale by us of up to $40 million of our common stock from time to time in ATM offerings.

As of December 31, 2022, we have not sold any shares of common stock under the ATM.

In addition, in March 2023, we entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park, giving the Company the right, but not the obligation to sell to Lincoln Park up to $35.0 million worth of shares of our common stock.

As of December 31, 2023, we sold 2,859,074 shares of common stock under the ATM for gross proceeds of approximately $5.3 million.

As of December 31, 2023, there was $34.7 million of common stock remaining available for sale under the ATM.

In addition, in March 2023, we entered into the Lincoln Park Purchase Agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park, giving the Company the right, but not the obligation to sell to Lincoln Park up to $35 million worth of shares

of our common stock.

During the year ended December 31, 2023, we sold 125,000 shares of common stock to Lincoln Park for proceeds of $0.2 million, as part of the equity line financing arrangement.

As of December 31, 2023, $34.8 million was available to draw pursuant to the Lincoln Park Purchase Agreement.

On March 14, 2024, we closed our follow-on public offering, selling 6,571,428 shares of our common stock at a public offering price of $1.75 per share.

The net proceeds were approximately $10.4 million, after deducting underwriting discounts and commissions and other offering related expenses payable by us.

As of December 31, 2023, we had $29.9 million in cash and cash equivalents and have not generated positive cash flows from operations.

Based on our current business plans, we believe that the net proceeds from the IPO and follow-on public offering, together with our existing cash and cash equivalents and income from non-dilutive grants, will be sufficient for us to fund our operating expenses and capital expenditures requirements into the second half of 2024, which assumes no usage from the ATM nor purchase agreement with Lincoln Park.

Based on our current business plans, we believe that our existing cash and cash equivalents, income from non-dilutive grants, and net proceeds from our March 2024 follow-on public offering will be sufficient for us to fund our operating expenses and capital expenditures requirements through May of 2025, which assumes no usage from the remaining ATM nor the Lincoln Park Purchase Agreement.

We have based these estimates on assumptions that may prove to be incorrect or require adjustment as a result of business decisions, and we could utilize our available capital resources sooner than we currently expect.

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Our future funding requirements will depend on many factors, including, but not limited to:

● the scope, progress, costs and results of our ongoing and planned clinical trials of CT1812, as well as the associated costs, including any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to the COVID-19 pandemic or other diseases, macroeconomic conditions, global or political instability, such as the ongoing conflict between Ukraine and Russia, inflation, or other delays;

● the scope, progress, costs and results of our ongoing and planned clinical trials of CT1812, as well as the associated costs, including any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to a pandemic, such as the COVID-19 pandemic, or other diseases, macroeconomic conditions, global or political instability, such as the ongoing global and regional conflicts, inflation, or other delays;

● the scope, progress, costs and results of preclinical development, laboratory testing and clinical trials for any future product candidates we may decide to pursue;

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Adequate funding may not be available when needed or on terms acceptable to us, or at all.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic or other diseases, the ongoing conflict between Ukraine and Russia, inflation, liquidity constraints, failures and instability in U.S.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the effects of the COVID-19 pandemic or other diseases, the ongoing global and regional conflicts, inflation, liquidity constraints, failures and instability in U.S.

and international financial banking systems, and otherwise.

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Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Operating Activities

Net cash used in operating activities for the year ended December 31, 2023 was $16.0 million, which consisted primarily of our net loss of $25.8 million partially offset by net non-cash charges of $5.0 million and a net change of $4.8 million in our operating assets and liabilities.

The non-cash charges primarily consisted of $0.3 million of other expense related to the Lincoln Park Purchase Agreement, amortization of right-of-use assets and other depreciation and

amortization of $0.3 million, and equity-based compensation of $4.4 million.

The net change in our operating assets and liabilities was primarily due to an increase in grant receivables of $2.4 million, an increase in prepaid expenses and other assets of $1.8 million, an increase in accounts payable and accrued expenses of $2.4 million, partially offset by a decrease in deferred grant income and other liabilities of $1.6 million, and a decrease of $0.1 million of operating lease liabilities.

Net cash used in operating activities for the year ended December 31, 2022 was $18.5 million, which consisted primarily of our net loss of $21.4 million partially offset by net non-cash charges of $3.8 million and a net change of $0.9 million in our operating assets and liabilities.

The non-cash charges primarily consisted of depreciation and amortization of less than $0.1 million, amortization of right-of-use assets of $0.2 million, and equity-based compensation of $3.6 million.

The net change in our operating assets and liabilities was primarily due to an increase in grant receivables of $1.9 million, an increase in other assets of $1.7 million, a decrease in accounts payable of $1.1 million, partially offset by an increase in deferred grant income and other liabilities of $2.6 million, and a decrease of $0.9 million of prepaid expenses, other current assets, and other receivables.

Net cash used in operating activities for the year ended December 31, 2021 was $3.6 million, which consisted primarily of our net loss of $11.7 million partially offset by net non-cash charges of $5.2 million and a net change of $2.8 million in our operating assets and liabilities.

The non-cash charges primarily consisted of depreciation and amortization of $0.1 million, amortization of debt discount of $0.4 million, change in fair value of SAFE of $2.2 million, and equity-based compensation of $5.1 million, partially offset by a change in the fair value of the derivative liability of $2.2 million.

The net change in our operating assets and liabilities was primarily due to an increase in accounts payable of $2.2 million, an increase in accrued expenses of $1.3 million, and an increase in other current liabilities of $0.5 million, partially offset by an increase in grant receivables of $1.2 million.

Investing Activities

During the years ended December 31, 2022 and 2021, we used $0.2 and less than $0.1 million of cash, respectively, for investing activities related to purchases of property and equipment.

During the years ended December 31, 2023 and 2022, we used $0.1 and $0.2 million of cash, respectively, for investing activities related to purchases of property and equipment.

Financing Activities

Net cash provided by financing activities was $4.5 million and $5.5 million for the years ended December 31, 2023 and 2022, respectively.

The decrease in cash provided by financing activities relates primarily to the IPO of our stock whereby we received net proceeds of $44.2 million and the issuance of SAFEs whereby we received $8.9 million during the year ended December 31, 2021.

This is partially offset by proceeds received from the exercise of common stock options in the amount of $1.6 million, as well as proceeds from issuance of common stock in our follow-on public offering in the amount of $5.3 million during the year ended December 31, 2022.

The change in net cash provided by financing activities is primarily related to net proceeds from the issuance of common stock under the ATM program and sale of common stock pursuant to the Lincoln Park Purchase Agreement during the year ended December 31, 2023 as compared to the proceeds from the issuance of common stock in our November 2022 follow-on public offering in the amount of $5.3 million during the year ended December 31, 2022.

Contractual Obligations

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Payments of less than $0.1 million are due monthly from October 2022 through September 2023.

As of December 31, 2023, there was no remaining outstanding principal on the loan.

In October 2023, we entered into an insurance premium financing arrangement with the same lender whereby we financed $0.7 million of certain premiums at a 8.65% annual interest rate.

Payments of less than $0.1 million are due monthly from October 2023 through September 2024.

As of December 31, 2023, the outstanding principal of the loan was $0.5 million.

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We provided a security deposit in the form of a Letter of Credit in the amount of less than $0.1 million pursuant to the terms of the lease.

We enter into contracts in the normal course of business with contract research organizations and other vendors to assist in the performance of our research and development and other services and products for operating purposes.

We enter into contracts in the normal course of business with CROs and other vendors to assist in the performance of our research and development and other services and products for operating purposes.

These contracts typically do not contain minimum purchase commitments and generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations.

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Up until October 13, 2021, the Company was privately held and did not have a trading history of common stock.

As such, the expected volatility was derived from the average historical stock volatilities of the common stock of several public companies within the industry that the Company considers to be comparable to our business over a period equivalent to the expected term of the stock-based awards.

As such, the expected volatility was derived from the average historical stock volatilities of the common stock of several public companies within the industry that the Company considers to

be comparable to our business over a period equivalent to the expected term of the stock-based awards.

The Company will continue to derive expected volatility from average historical stock volatilities of industry peers until the Company has compiled a trading history of its own for a sufficient period of time.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis